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Questioning Champion’s Value
by Ron Davis

Did an independent appraiser use “unreliable” data in his efforts to estimate the value of a Texas shopping center for tax purposes?

A Texas court thinks he did, and, as a result, the property tax bill of the shopping center is now substantially larger than its owner apparently thinks is fair.

The shopping center is Champion’s Village in Houston, and its owner, Weingarten Realty Investors, purchased the property in 1998 for $36 million. For 1999, local government appraisers set the value of Champion’s Village at $30 million. In response, Weingarten appealed to the courts, contending that the local government’s appraised value was in error.

To prove its point, Weingarten offered the opinion of a highly qualified tax authority. He testified at trial that the “equal-appraised” value of Champion’s Village was only $19,149,962—more than $10 million less than government officials had estimated. He explained that his analysis had included some other Houston-area shopping centers, which he said were comparable to Champion’s Village.

Government officials attempted to demonstrate, however, that the tax expert’s comparable properties were questionably “comparable” and questionably “appropriately adjusted.” Therefore, the officials added, any opinion drawn from his data is unreliable.

As an example, government officials pointed out that the tax expert used only 10 property examples, even though 191 retail centers exist in the area of the county in which Champion’s Village is located. And his comparable properties, they said, were “significantly smaller” than is Champion’s Village.

A Texas court rejected the findings of the tax expert and ruled in favor of the government officials. Weingarten appealed, contending that the judge’s decision was “arbitrary.”

A Texas appellate court upheld the ruling of the lower court, explaining, “We find ample support in the record for the conclusion that the tax expert’s testimony was inadmissible because he lacked reliable foundation for his opinions. As a result, the exclusion of his testimony was not arbitrary nor without reference to any guiding rules or legal principles.” (Weingarten Rlty. Inv. v. Harris Cty Apprais., 93 S.W.3d 280 [Tex.App.—Houston 14th Dist.] 2002)

Decision: August 2002
Published: January 2003



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